02.16.2014 - carolina castilla

WHAT’S YOURS IS MINE AND

WHAT’S MINE IS MINE:

Bargaining Power and Income Concealing between Spouses in India

Authors: Carolina Castilla

(Colgate University)

Motivation

Castilla & Walker (2013):

Ghana

Private lottery windfalls are allocated towards gifts and loans

Public lottery windfalls are spent on highly visible items (assets, ceremonies and health) – Husbands

Personal care by wives

Castilla (2011):

Ghana (same households, but 10 years earlier)

Asymmetric Information over farm income allocated towards gifts by husbands.

Theory: incentives to hide in HH with cooperative and non-cooperative contracts.

Research Objectives

Bargaining power depends on:

Share of resources of each spouse

Anderson and Eswaran, (2009): the influence of additional

resources on bargaining power of women is small compared to

idiosyncratic or cultural sources of bargaining power.

Cultural norms and socio-economic characteristics.

Research Question:

How do different sources of bargaining power affect

cooperation and efficiency between spouses under asymmetric

information?

Conclusions

Theoretical Findings:

There exists a threshold level change of bargaining power that

needs to be exceeded to induce revelation

Empirical Findings:

Experiments with established couples in Uttarakhand, India

Ultimatum games that varied control over endowments

Information Treatments: Public, Private and Private with option

to reveal

When given the chance, 21% of spouses choose to conceal

No differences by gender contributions towards HH account

Men who choose to reveal are more cooperative than women

Experiments with Spouses

Testing across HH models: Kebede et al. (2011); Munro et

al. (2008); Munro et al. (2011)

Spousal Preferences: Bateman & Munro (2005); Cochard et

al. (2009); Dasgupta and Mani, (2013); Carlsson et al.

(2012)

Dictator games: Iversen et al. (2011)

Asymmetric Information: Ashraf (2009); Mani (2013);

Hoel (2013)


Ashraf (2009) the goal is to find whether hiding occurs,

and how communication influences spousal behavior.

Information Treatments:

Private: obscures choices and allows plausible deniability

Public: all choices and outcomes are observed

Negotiation: spouses communicate prior to making choices

Findings:

Invest in own account if Private (men and women)

Commit consumption if Public (men)

Save in wife’s account if Negotiation (men)

If spouse controls savings, save in own account


Mani (2013): differs in timing of information treatment

Income-control treatment:

Two investment options (high and low)

Baseline: Fixed shares, no trade-off btw control and payoff

High return investment goes towards spouse’s account: private, cash or joint – differences in cost of appropriating

Low return: own private account

Information Treatment: (ex-post)

None, Full or partial – only inform outcomes (not choices) and allow to renegotiate

Findings: control matters, information and threat of retaliation do not.

The Model

Contract:

Spouses pool all of their resources and bargain over how to allocate them between private and public good consumption.

Benchmark: When T is revealed:

The household solves:

max𝑄,𝑥𝑚≥0

𝜇 𝑌𝑓 ,𝑌𝑚 ,𝑇,𝑝, 𝑧 𝑢 𝑥𝑚 + 𝑣 𝑄

+ 1 − 𝜇 𝑌𝑓 ,𝑌𝑚 ,𝑇,𝑝, 𝑧 𝑢 𝑌𝑓 + 𝑌𝑚 + 𝑇 − 𝑥𝑚 − 𝑝𝑄 + 𝑣 𝑄

max𝑄,𝑥𝑚≥0

𝜇 𝑌𝑓 ,𝑌𝑚 ,𝑇,𝑝, 𝑧 𝑢 𝑥𝑚 + 𝑣 𝑄

+ 1 − 𝜇 𝑌𝑓 ,𝑌𝑚 ,𝑇,𝑝, 𝑧 𝑢 𝑌𝑓 + 𝑌𝑚 + 𝑇 − 𝑥𝑚 − 𝑝𝑄 + 𝑣 𝑄

Where:

Husband’s bargaining power

Distribution factors, for instance cultural or legal factors z

The Model

Proposition:

There exists a strictly positive threshold change in bargaining

power ( ) such that if there are incentives to hide.

𝜕𝑈𝑚

𝜕𝑇 𝑅

< 𝜕𝑈𝑚

𝜕𝑇 𝐻

Intuition of Proof: Husband hides T iff

∆𝜇 𝜕𝜇

𝜕𝑇< ∆𝜇

Low Initial Bargaining Power

lim𝜇→0

∆𝜇 < 0

lim𝜇→1

∆𝜇 > 0 High Initial Bargaining Power

No Hiding

Hiding can occur depending on responsiveness of BP

Testable Hypotheses

Hypothesis 1: Hiding is Inefficient.

Hiding will cause underinvestment in household public goods.

Hypothesis 2: Income hiding can occur even when revealing the

available resources increases bargaining power.

Bargaining power is determined partly by relative amount of

resources and partly by other factors.

Experimental Design (Location)

Dehradun

Almora

Uttarakhand

Experimental Design

Sample: 200 established couples, 50% from Dehradun and 50% from Almora.

Recruitment: Door-to-door

Mobile Lab: at their homes.

Incentives: LED lamp per spouse, plus opportunity to earn some cash.

Protocol:

Enumerator of same gender

Separate rooms

Ultimatum Game: using strategy method

Survey

Experimental Design: Timeline

Randomly assigned to an information treatment

Each spouse randomly assigned to a Role (A or B)

Player A: Informed party

Player B: Informed of outcome

Endowments: informed of their own (ω_i ) and their

spouse’s (ω_j ) endowment

Each spouse was presented with 7 decisions, one-at-a-

time

Experimental Design: Choices

Play modified Ultimatum Game

Split own share of endowments between:

Household Account

Own Account

Spouse’s Account

Player A:

played 7- lotteries with 50% chance to win Rs. 75

Player B: no lottery option

Payoffs:

𝜋𝑖 = 𝑥𝑖 + 𝑔 ∗1.5

2

Information Treatment

Information Environment

Lottery Prize Eligible

(Player A)

Wife Husband

Private with option to

Disclose (POD) T1 T2

Private Information (PI) T3 T4

Complete Information (CI) T5 T6

Experimental Design: Player A Flip Coin

Heads:

Extra Rs. 75 Tails

Informed of Endowment

Distribution

Conceal

Split Endow

A+75, B, PG

Split Endow+75

A, B, PG

Split Endow

A, B, PG

Private

&/or Reveal

Complete

&/or

Accept or Reject

Informed of Player B’s

Proposed Split

Experimental Design: Player B

Private &

Conceal:

50% change

Player A has 75

Informed of

Endowment Distribution &

Outcome of Coin Toss

Split Endowment

A, B, PG

Accept

Informed of Player A’s

Proposed Split

Complete &

Reveal:

Player A has 75

If heads

Reject

Table 2: Distribution of Resources

Endowment

(Player B –

Player A) 1/

Distribution of Resources 2/

Household

Endowment Without Lottery Prize

With Lottery Prize,

If known or revealed

Change

(%)

Player B Player A Player B Player

A

255 - 45 85 15

68 32 17 300

150 - 75 67 33

50 50 17 225

195 - 105 65 35

52 48 13 300

150 -150 50 50

40 60 10 300

120 - 180 40 60

32 68 8 300

105 - 195 35 65 28 72 7 300

150 - 225 40 60

33 67 7 375

1/ Amounts in Indian Rupees.

Bargaining Power Treatment

Experimental Design: Visual Aid

Your Money Your Spouse Household

50

20

20

50

10

10

5

5

5

5


Your Money Your Spouse Household

20

20

50

10

10

5

5

50 5

Empirical Strategy: Baseline

𝑥𝑠,ℎ ,𝑟𝑔

= 𝛿1𝑔𝑇ℎ𝑃𝑟 + 𝛿2

𝑔𝑇ℎ𝑃𝑟−𝐷 + 𝛿3

𝑔𝑇ℎ𝑃𝑟−𝐶 + 𝛽 𝑤𝑠,ℎ ,𝑟 + 𝜃 𝑋𝑠,ℎ ,𝑟 + 𝛼𝑠

𝑛

𝑠=1

+ 𝜎𝑟

7

𝑟=1

+ 휀𝑠,ℎ ,𝑟

𝛿1𝑔

= 𝛿3𝑔≠ 0 Hypothesis 1:

𝛿2𝑔

= 0

No guilty compensation

No differences among disclosers and PI

Dependent: Amount in HH Account or Own Account

Controls 𝑋𝑠,ℎ,𝑟 : Gender, District and Lottery outcome (heads).

Own share of endowments 𝑤𝑠,ℎ,𝑟

Round fixed effects.

Spouse random effects.

All Player A Player B All Player A Player B

Own Share

Endowment

1.464***

(0.043)

1.575***

(0.061)

1.362***

(0.061)

0.764***

(0.036)

0.953***

(0.048)

0.646***

(0.047)

Private-7.628**

(3.101)

-19.73***

(4.221)

4.592

(4.202)

11.84***

(3.065)

26.74***

(3.308)

-3.059

(2.687)

Private - Reveal2.312

(3.469)

3.639

(4.746)

0.920

(4.326)

-0.142

(2.464)

-0.613

(3.512)

-0.036

(2.775)

Private - Conceal-10.46**

(3.642)

-21.46***

(5.318)

1.278

(5.132)

11.65**

(5.214)

31.88***

(5.339)

-7.040**

(2.568)

N 2799 1399 1400 2799 1399 1400

R-squared 0.4197 0.4449 0.4292 0.3078 0.4979 0.2446

HH Account Own Account

Panel (a): Information Treatment Effects

Results: Effect of Asymmetric

Information

Random Effects.

No differences across genders

Baseline Results Description

As bargaining power increases:

Allocation towards HH account increases

Allocation towards Own account increases half as much

Private Information:

Decreases allocation towards HH account (Player A = information

advantage)

Statistically equal for those who choose to conceal

By construction allocation towards own account:

Increases for Player A

Decreases for Player B – knowing there is asymmetric information

increases sharing (other’s account)

Empirical Strategy: Two-way Interaction

𝑥𝑠,ℎ ,𝑟𝑔

= 𝛽 𝑤𝑠,ℎ ,𝑟 + 𝛿𝑗𝑔𝑇ℎ𝑗

× 𝑤𝑠,ℎ ,𝑟

3

𝑗=1

+ 𝜃 𝑋𝑠,ℎ ,𝑟 + 𝛼𝑠

𝑛

𝑠=1

+ 𝜎𝑟

7

𝑟=1

+ 휀𝑠,ℎ ,𝑟

𝛿1𝑔

= 𝛿2𝑔

= 𝛿3𝑔

= 0 Hypothesis 2: No differences in effect of

BP by Info. Treatment

Dependent: Amount in HH Account or Own Account

Controls 𝑋𝑠,ℎ,𝑟 : Gender, District and Lottery outcome (heads).

Own share of endowments 𝑤𝑠,ℎ,𝑟

Round fixed effects.

Spouse fixed effects.


Own Share

Endowment

1.503***

(0.084)

1.680***

(0.124)

1.287***

(0.106)

0.865***

(0.060)

0.913***

(0.090)

0.688***

(0.061)

Private X Own Share-0.001

(0.110)

-0.107

(0.157)

0.154

(0.150)

-0.170*

(0.089)

-0.000

(0.123)

0.000

(0.100)

Private-Reveal X

Own Share

-0.035

(0.112)

-0.110

(0.160)

0.075

(0.151)

-0.060

(0.087)

-0.017

(0.119)

-0.064

(0.107)

Private-Conceal X

Own Share

-0.170**

(0.086)

-0.411**

(0.132)

0.007

(0.110)

0.128

(0.107)

0.529***

(0.130)

0.126

(0.097)

N 2799 1399 1400 2799 1399 1400

R-squared 0.4199 0.4466 0.4301 0.3086 0.4978 0.2426

Panel (a):Two-way Interaction, (BP) and Information


Results: Two-way Interaction, BP

and Information

Fixed Effects.

Two-way Interaction Results

As bargaining power increases, allocation towards HH Account:

Increases if Complete Information

No differences b/w Complete Information and Private & Disclose or

Private

Decrease if Private & Conceal : those least cooperative, become less

so as BP increases

As bargaining power increases, amount towards Own Account:

Increases regardless of information environment

Except for:

Those who choose to conceal – increase allocation towards own

account significantly more.


Own Share

Endowment

0.494***

(0.013)

0.510***

(0.018)

0.470***

(0.020)

0.265***

(0.011)

0.303***

(0.014)

0.228***

(0.015)

Private-11.94**

(4.146)

-24.63***

(5.551)

1.494

(5.834)

14.55**

(4.706)

31.30***

(4.812)

1.419

(3.872)

Private - Reveal-1.675

(4.277)

0.534

(5.842)

-4.930

(5.273)

4.248

(3.629)

4.745

(4.943)

1.868

(3.771)

Private -

Conceal

-9.839*

(5.420)

-18.59**

(7.669)

0.260

(7.919)

11.42

(8.059)

29.22***

(7.895)

7.396

(6.568)

Gender

(=1 if Male)

-3.127

(4.379)

-0.969

(5.950)

-4.727

(5.576)

1.225

(3.250)

-1.192

(4.535)

-0.001

(3.757)

Private X Male8.530

(5.938)

9.841

(8.181)

6.087

(8.057)

-5.479

(5.979)

-9.257

(6.373)

-5.299

(5.338)

Private-Reveal

X Male

6.997

(6.606)

5.354

(9.209)

10.68

(8.171)

-9.240*

(4.824)

-11.39*

(6.785)

-4.354

(5.491)

Private-Conceal

X Male

1.869

(7.221)

-3.156

(11.12)

4.691

(9.806)

1.807

(10.42)

7.029

(9.528)

-6.126

(7.962)


Results: Two-way Interaction,

Gender and Information

Random Effects.


Own Share

Endowment

1.503***

(0.084)

1.681***

(0.124)

1.287***

(0.106)

0.865***

(0.060)

0.913***

(0.090)

0.688***

(0.061)


(0.132)

-0.260

(0.185)

0.098

(0.188)

-0.115

(0.116)

0.159

(0.153)

0.206

(0.138)

Private-Reveal X

Own Share

-0.173

(0.145)

-0.308*

(0.183)

-0.005

(0.219)

0.123

(0.120)

0.209

(0.135)

-0.118

(0.171)

Private-Conceal X

Own Share

-0.183

(0.130)

-0.377**

(0.178)

-0.033

(0.182)

0.078

(0.164)

0.480**

(0.186)

0.207

(0.168)

Private X Own Share

X Male

0.208

(0.142)

0.314

(0.187)

0.107

(0.212)

-0.109

(0.133)

-0.330

(0.163)

-0.399

(0.151)

Private-Reveal X

Own Share X Male

0.272*

(0.149)

0.401**

(0.191)

0.158

(0.223)

-0.359**

(0.123)

-0.460***

(0.140)

0.093

(0.182)

Private-Conceal X

Own Share X Male

0.051

(0.169)

-0.046

(0.262)

0.100

(0.225)

0.077

(0.210)

0.077

(0.237)

-0.156

(0.194)

N 2799 1399 1400 2799 1399 1400

R-squared 0.4218 0.4499 0.4311 0.3121 0.5034 0.2502

Panel (b): Three-way Interaction, BP, Information and Gender


Results: Three-way Interaction,

BP, Information and Gender

Three-way Interaction Results

Two-way interactions average out gender differences which

move in opposite directions

For Females, as BP increases:

Increase in allocation towards HH Account

No differences between Complete and Private Information

Decrease in allocation towards HH Account if Private Info with

Option relative to Complete Information

For Males, as BP increases:

No differences between Complete, Private Information or Private &

Conceal

Increase in allocation towards HH Account if Private & Reveal – Men

are more cooperative


Own Share

Endowment

1.503***

(0.084)

1.681***

(0.124)

1.287***

(0.106)

0.865***

(0.060)

0.913***

(0.090)

0.688***

(0.061)


(0.132)

-0.260

(0.185)

0.098

(0.188)

-0.115

(0.116)

0.159

(0.153)

0.206

(0.138)

Private-Reveal X

Own Share

-0.173

(0.145)

-0.308*

(0.183)

-0.005

(0.219)

0.123

(0.120)

0.209

(0.135)

-0.118

(0.171)

Private-Conceal X

Own Share

-0.183

(0.130)

-0.377**

(0.178)

-0.033

(0.182)

0.078

(0.164)

0.480**

(0.186)

0.207

(0.168)

Private X Own Share

X Male

0.208

(0.142)

0.314

(0.187)

0.107

(0.212)

-0.109

(0.133)

-0.330

(0.163)

-0.399

(0.151)

Private-Reveal X

Own Share X Male

0.272*

(0.149)

0.401**

(0.191)

0.158

(0.223)

-0.359**

(0.123)

-0.460***

(0.140)

0.093

(0.182)

Private-Conceal X

Own Share X Male

0.051

(0.169)

-0.046

(0.262)

0.100

(0.225)

0.077

(0.210)

0.077

(0.237)

-0.156

(0.194)

N 2799 1399 1400 2799 1399 1400

R-squared 0.4218 0.4499 0.4311 0.3121 0.5034 0.2502

Panel (b): Three-way Interaction, BP, Information and Gender


Results: Three-way Interaction,

BP, Information and Gender

Three-way Interaction Results

For Females, as BP increases:

Increase in allocation towards Own Account


Reveal

Increase in allocation towards Own Account if Private & Conceal by

50% more.

For Males, as BP increases:


Conceal

Decrease in allocation towards HH Account if Private & Reveal – the

increase in HH account comes from reduction on own resources.

Mechanisms (female response)

Members of the HH that work for Income Dehradun Almora

Husband and Wife 19 10

Husband Only 53 72

Wife Only 1 1

Husband and Other than Wife 16 12

Proportion of HHs where respondent decides Dehradun Almora

Whether to work outside of Home 17 8

How many children to have 4 1

Major Household Purchases 6 5

Gifts to respondent's relatives 16 1

Sell land 2 0

Savings from Household Money 7 0

Members of the HH that work for Income Dehradun Almora

Husband and Wife 19 10

Husband Only 53 72

Wife Only 1 1

Husband and Other than Wife 16 12

Proportion of HHs where respondent decides Dehradun Almora

Whether to work outside of Home 17 8

How many children to have 4 1

Major Household Purchases 6 5

Gifts to respondent's relatives 16 1

Sell land 2 0

Savings from Household Money 7 0

Conclusions

Theoretical Findings:

There exists a threshold level change of bargaining power that needs to be exceeded to induce revelation

High Initial BP: threshold strictly positive

Low Initial BP: no incentives to conceal money

Empirical Findings:

When given the chance, 21% of spouses choose to conceal

No compensation through increased HH Good allocation

No differences by gender on Own and Public Good contributions

Men who choose to reveal are more cooperative than women:

As BP increases, men contribute more towards PG, while women contribute less

THANKS!

QUESTIONS?

Contact: [email protected]

02.16.2014 - carolina castilla

Education

private account

bargaining power of

asymmetric information

spouses mani

account spouses accountplayer

private men

spouses ashraf

spouses pool